Why Shake Shack Stock Has Gained 59% So Far in 2019

Faster growth at existing locations has investors believing in the burger chain's expansion hopes again.

Demitrios Kalogeropoulos
Demitrios Kalogeropoulos
Jul 8, 2019 at 10:04AM
Consumer Goods

What happened

It has been a sizzling year forĀ Shake Shack (NYSE:SHAK) shareholders as the stock gained 59% in the first half of 2019 compared to a 17% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

A man takes a bite out of a burger.

Image source: Getty Images.

So what

Investors were pleased to hear that the better-burger chain ended fiscal 2018 on an upswing. Customer traffic returned in the fourth quarter, leading to comparable-store sales growth of 2% compared to a minor decrease in the prior quarter. That positive momentum continued into the new year, with comps rising nearly 4% in the first quarter thanks to a mix of higher prices and increased customer visits.

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Now what

Shake Shack's core growth figures still aren't impressive compared to the wider industry. LeaderĀ McDonald's, after all, far outpaced the upstart's comps over the past year.

But investors are excited about the potential for much a larger sales base as Shake Shack expands beyond its current limited focus. That prospect seemed remote when the company was posting consistent market-share losses at existing locations, but it's more likely now that it is achieving industry-beating sales metrics.